One Cofounder Is Doing More. Should the Equity Change?

A couple of days ago, someone in one of my business groups asked whether anyone had experience with a cofounder wanting to retroactively redraw the cap table.

These weren’t founders six months into a new venture. They had been building together for years and had a business with significant revenue. One founder felt he had contributed more than the others and wanted the ownership split changed to reflect that.

There was a lot of advice in the discussion.

The first question I would ask is this:

Were the founders wrong about the ownership split when they made it, or has something materially changed since then?

Those are two very different problems.

And before anyone starts moving equity around, I think you need to know which one you are actually trying to solve.

Start with the deal you made

When a founder says, “I’m doing more,” my first instinct isn’t to start counting hours.

I’d go back to the beginning.

What did you agree each person would contribute? How specific were you about roles? Was one founder always expected to work full-time while another stayed part-time? Was one responsible for technology and another for sales? Was someone expected to continue earning income elsewhere? Who was putting money in? What risks had each person agreed to take?

This is one of the reasons I’m so insistent that cofounders have these conversations early and actually write down what they decide.

Otherwise, years later, you’re trying to reconstruct the deal from memory. And memory gets particularly unreliable once someone feels things have become unfair.

If I agreed to work full-time and you agreed to work three days a week, the fact that I’m working more hours doesn’t necessarily mean something has gone wrong. That may be exactly what we agreed to.

The more useful question is whether either of us is now being asked to do something substantially different from what we originally signed up for.

“Doing more” isn’t always as obvious as it looks

I see this quite often with technical and non-technical cofounders.

The technical founder may be sitting at a computer for ten hours building the product. You can see what they made at the end of the day. There’s code, a feature, a product that didn’t exist that morning.

The non-technical founder’s work can be much harder to see.

They may be on calls. Meeting investors. Building a sales pipeline. Having coffee with a potential customer. Taking someone to lunch.

I’ve heard versions of, “All my cofounder does is go for lunches.”

Except sometimes those lunches are where the customers come from.

And plenty of them won’t produce anything. That’s part of the job too.

One person can look busier simply because their work produces something more tangible. That doesn’t automatically make their contribution greater.

Before deciding there is an imbalance, make sure you’re comparing contribution rather than visibility.

It may also just be a season

Companies move through different periods, and founder workloads move with them.

There may be a stretch when almost everything depends on product and the technical founder is carrying an enormous amount. Six months later, the product may be reasonably stable and suddenly sales, fundraising or operations consume the company.

If cofounders start recalculating ownership every time the workload tilts toward one person, the cap table becomes a running scorecard.

I don’t think that’s what founder equity is for.

You need to distinguish between a temporary imbalance and a real change in the partnership.

Ask: Is this a busy quarter, or is this now the job?

That distinction matters.

Look at risk, not just workload

Hours are also only one part of contribution.

Sometimes what changes isn’t how much someone works. It’s what they’re putting on the line.

Imagine two founders originally agree that one will keep their well-paid job while helping build the company on the side. A year later, the business reaches a point where it needs that founder full-time.

Now the deal has changed.

That person may be giving up their salary, benefits and career security because the company needs more from them than anyone anticipated when the original equity split was agreed.

Or perhaps the founders planned to outsource the technology, but one founder ends up having to build the entire product internally.

Maybe one founder has to put in substantially more capital than expected.

Maybe a role that looked relatively contained at the beginning has become central to the company’s future.

Those situations are quite different from, “I’ve been staying at the office later than you.”

I’d look at four things

That last question matters because you don’t want to redesign ownership simply to reward the past while ignoring what the business needs next.

There are times I would revisit equity

I don’t believe founder equity can never change.

Early in a company’s life, you’re making a surprising number of decisions with very little information.

You think you know what everyone’s role will be. Then you build the company and discover you were wrong.

That is one reason vesting can be useful. The early years reveal things about commitment, roles and what the company actually requires that you simply couldn’t know on day one.

If two founders agreed on an equity split based on one person remaining part-time and six months later that person has quit their job and become essential full-time, I think it is reasonable to have a conversation.

If you planned to hire an outside technical team and instead your technical cofounder ends up building the entire platform, that may be worth revisiting too.

But notice what happened in both examples.

The underlying deal changed.

That is very different from deciding, years later, that one founder deserves more ownership because they now believe they worked harder.

The longer you’ve been together, the more cautious I would be

Once you have been operating for years, the company has substantial value and the ownership structure has long been established, I would set a much higher bar for retroactively changing founder equity.

Founder equity reflects much more than this year’s workload.

It reflects the risk people took when there may have been nothing to build on. The uncertainty they accepted. The opportunities they gave up. The years when their contribution may have been more important than it is today.

And contribution changes.

If you reopen the original ownership decision whenever someone believes they have carried more of the load, where does that end?

Do you recalculate the cap table again three years from now if the balance shifts in the other direction?

That doesn’t mean someone who is contributing substantially more should simply accept it.

It means equity may not be the right tool for fixing the problem.

Maybe the compensation should change, not the ownership

If one founder’s role has genuinely become bigger, there are other ways to recognize that.

What matters is being very clear about why they are receiving something additional.

If someone is getting a larger salary because they have taken on the CEO role, write that down.

If there is additional equity attached to specific future responsibilities or milestones, define them.

If a founder is being compensated for taking a new financial or career risk, say so.

Don’t solve one vague agreement by creating another one.

And don’t assume changing a cap table is just paperwork

There is another reason I would be cautious in an established company.

You may not be able to simply decide that Founder A will give Founder B a few percentage points and update the spreadsheet.

Depending on the company, its jurisdiction and its governing agreements, transferring or issuing shares can raise tax questions, transfer restrictions, valuation issues and corporate approval requirements. If equity is being provided in connection with someone’s services, that can also affect how the transaction is treated for tax purposes.

Once a company has meaningful value, you are moving an asset with meaningful value.

So even if all of the founders agree in principle, I would want the company’s lawyer and tax advisor involved before anyone decides how to accomplish it.

First decide whether changing ownership is actually the right answer.

Then figure out whether you can and should do it.

Resentment usually doesn’t disappear on its own

There is one part of this that has nothing to do with spreadsheets.

By the time someone says, “I’m doing more than you,” there is often already some resentment underneath it.

And resentment is probably the time founders are least interested in having a calm conversation about expectations.

Unfortunately, avoiding it rarely makes it better.

Sometimes the conversation reveals a genuine structural problem. Someone really has taken on a different role, greater risk or a commitment that bears little resemblance to the original agreement.

Sometimes it reveals the opposite. The founders are contributing differently, the workload happens to be tilted toward one person right now, or one person simply hasn’t understood what the other has been doing.

Either outcome is useful.

But you have to have the conversation to find out.

If your cofounder tells you they are doing more and wants more equity, I wouldn’t start with the cap table.

I’d pull out the original agreement, formal or informal, and ask:

What has actually changed from the deal we made?

If the answer is substantial, permanent and important to what the company needs going forward, then there may be something to revisit.

If the answer is that one founder has simply had a heavier few months, works longer hours or does work that happens to be easier to see, changing ownership may create a much bigger problem than the one you were trying to solve.

Before you change the cap table

Before you change the cap table, find out whether you’re even solving the same problem.

I’d have each founder answer three questions separately

Then compare your answers.

The differences may tell you far more than the hours on a timesheet. You may discover that the real disagreement isn’t about effort at all. It’s about what each of you thought you signed up for, what you believe the other person is responsible for, or what you think is fair now that the company has changed.